Common Health Insurance Terms

Your Source for Health Insurance Information in Charleston, SC

The moment when you need to use your health insurance is the absolute worst time to find out that there's a hole in your policy you weren't expecting. Make sure this never happens to you by working with the top insurance agency in Charleston, SC. C2G Capital Management LLC employs honest and knowledgeable agents who will give you individual attention you need to understand the intricacies of your insurance. We've put together this list of common health insurance terms to help you as well. When something isn't making sense, or you've discovered an issue with your policy that you'd like to address, contact our office and arrange a 1-on-1 meeting to discuss all your health insurance questions!
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Common Health Insurance Terms

Allowable Charge - Sometimes known as the "allowed amount," "maximum allowable," and "usual, customary, and reasonable (UCR)" charge, this is the dollar amount considered by a health insurance company to be a reasonable charge for medical services or supplies based on the rates in your area.

Benefit Year - The 12-month period for which health insurance benefits are calculated, not necessarily coinciding with the calendar year. Health insurance companies may update plan benefits and rates at the beginning of the benefit year.

Coinsurance - The amount you pay to share the cost of covered services after your deductible has been paid. The coinsurance rate is usually a percentage. For example, if the insurance company pays 80% of the claim, you pay 20%.

Coordination of Benefits - A system used in group health plans to eliminate duplication of benefits when you are covered under more than one group plan. Benefits under the two plans usually are limited to no more than 100% of the claim.

Copayment - One of the ways you share in your medical costs. You pay a flat fee for certain medical expenses (e.g., $10 for every visit to the doctor), while your insurance company pays the rest.

Deductible - The amount of money you must pay each year to cover eligible medical expenses before your insurance policy starts paying.

Drug Formulary - A list of prescription medications covered by your plan.

Explanation of Benefits - The health insurance company's written explanation of how a medical claim was paid. It contains detailed information about what the company paid and what portion of the costs you are responsible for.

Health Maintenance Organization (HMO) - A health care financing and delivery system that provides comprehensive health care services for enrollees in a particular geographic area. HMOs require the use of specific, in-network plan providers.

Health Savings Account (HSA) - A personal savings account that allows participants to pay for medical expenses with pre-tax dollars. HSAs are designed to complement a special type of health insurance called an HSA-qualified high-deductible health plan (HDHP). HDHPs typically offer lower monthly premiums than traditional health plans. With an HSA-qualified HDHP, members can take the money they save on premiums and invest it in the HSA to pay for future qualified medical expenses.

In-Network Provider - A health care professional, hospital, or pharmacy that is part of a health plan’s network of preferred providers. You will generally pay less for services received from in-network providers because they have negotiated a discount for their services in exchange for the insurance company sending more patients their way.

Network - The group of doctors, hospitals, and other health care providers that insurance companies contract with to provide services at discounted rates. You will generally pay less for services received from providers in your network.

Out-of-Network Provider - A health care professional, hospital, or pharmacy that is not part of a health plan's network of preferred providers. You will generally pay more for services received from out-of-network providers.

Out-of-Pocket Maximum - The most money you will pay during a year for coverage. It includes deductibles, copayments, and coinsurance, but is in addition to your regular premiums. Beyond this amount, the insurance company will pay all expenses for the remainder of the year.

Pre-Existing Condition - A health problem that has been diagnosed, or for which you have been treated, before buying a health insurance plan.

Preferred Provider Organization (PPO) - A health insurance plan that offers greater freedom of choice than HMO (health maintenance organization) plans. Members of PPOs are free to receive care from both in-network or out-of-network (non-preferred) providers, but will receive the highest level of benefits when they use providers inside the network.

Rider - Coverage options that enable you to expand your basic insurance plan for an additional premium. A common example is a maternity rider.
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